Aileen starts in business as a supplier of specialist art supplies by mail order on 1 May and makes the following transactions in the first few weeks: 1 May 2 May 3 May 4 May 5 May 6 May Opens a business bank account by depositing £15 000 of her own money. Buys a second hand van for £5000 paying by cheque drawn on the business account. Signs a rental agreement with the owners of a small office block to rent the ground floor for the next five years. Rental will be £2000 p.a. Buys equipment costing £3000 on credit terms from Office Supplies Ltd. Buys stock costing £4000 on credit from Helen’s Trade Supplies Ltd. Organizes advertising in a trade magazine run by Trade Publications ple at a cost of £1500 on credit terms. 8 May Pays first rental instalment of £200 for the month with a cheque drawn on the business bank account. 12 May Sells stock which cost £2000 for £3500 in cash. 13 May Sells stock which cost £300 for £500 on credit to E. Godbeer. 14 May Pays for telephone installation £120. 15 May Pays advertising creditor Trade Publications ple in full and £2000 to Helen’s Trade Supplies. 16 May Buys further stock on credit costing £10 000 from Helen’s Trade Supplies Ltd. 17 May Draws £100 for her own use. Required

(a) Draft the initial balance sheet and then the changes that occur as each of the transactions takes place.

(b) Enter the transactions in T accounts.

(c) Prepare a trial balance.

(d) Calculate the profit and prepare a balance sheet.